Death & Taxes – What You Need To Think About When Preparing Your Will

There are a number of documents that can be relevant when planning your estate. The most common are Powers of Attorney, Appointments of Enduring Guardian and, of course, your Will. Our client’s often ask us what things they need to think about before giving instructions for us to prepare any or all of these documents, so we thought we’d provide a short summary of some of the more important considerations. Here they are…

Power of Attorney

This involves the power to deal with your financial and legal affairs. It can either become effective immediately or in the hopefully unlikely event that you become physically or mentally unable to look after your own affairs. You should give consideration to the following:

(a)   appointing your spouse or partner initially;

(b)   if your spouse is either unable or unwilling to so act, then you should appoint someone else you feel you could trust to manage these affairs in the event that you are unable to;

(c)   decide when the power is to come into effect;

(d)   decide whether there are any particular restrictions you wish to place on the power or whether you wish to give the recipient the unfettered ability to deal as they think fit; and

(e)   as a general principal, it is a good idea to appoint someone either your own age or younger and someone in reasonably good health. This becomes particularly problematic if the attorney passes away before you while you are physically or mentally unable to look after your own affairs because you are then unable to execute a further Power of Attorney.

Appointment of Enduring Guardian

This concerns your lifestyle, medical and dental affairs. This can only come into effect in the event that you become physically or mentally unable to manage your own personal affairs. The same sort of considerations set out above in relation to a Power of Attorney apply in the case of an Appointment of Enduring Guardian.

Will

The Power of Attorney and Appointment of Enduring Guardian will only come into effect if you are physically or mentally unable to look after your own affairs. When you pass away, they pass with you. At that point, your Will comes into effect. Have a think about these issues:

(a)   you should consider whether you wish to appoint your spouse or partner as sole Executor and beneficiary in the event that you are the first to pass away;

(b)   you need to appoint an Executor in the event that your spouse or partner passes away before you. The Executor should be someone you trust to look after your Estate and to give instructions in regards to applying for probate and administering the Estate. For obvious reasons, it is a good idea to choose someone either the same age as you or younger. In any event, you should appoint an alternative Executor and Trustee to act in circumstances where the first appointed Executor is either unable or unwilling to act;

(c)   you should consider whether you wish to appoint a Guardian for any children you may have under the age of 18 years as at the date of your death;

(d)   the job of the Trustee is to hold money on trust for your children until they reach either the age of 18 years or such other age as you wish to nominate under the Will. The job of the Executor, Guardian and Trustee can be either the same person or different people;

(e)   you should consider whether you wish to give specific items to specific people. You should give careful consideration to this as a number of your assets (for example, motor vehicles and artwork) may change from time to time. If you nominate a specific item as a gift for a specific beneficiary and you do not hold that item as at the date of your death then that does not invalidate the Will. However, it can lead to confusion in the mind of the Executor as they try to administer your Estate;

(f)   you should consider whether or not you wish to leave specific financial gifts to various beneficiaries. In doing so, we observe that over time the significance of a specific dollar gift tends to reduce. In other words, a gift of $100 that was made in a Will more than 40 years ago represented a significant sum, whereas by today’s standards that is a nice thought but not a significant bequest;

(g)   it may be that there are significant tax or duty implications that arise from you leaving certain property to a specific beneficiary. A testamentary trust or other structures may be more helpful in that instance;

(h)   to limit the chances of your Will being contested, you should ensure that you make provision in your Will for everyone that you think may have an interest in your state. They may be a direct relative or someone that you have financially maintained for a period of time;

(i)   if you want the Will to last a long time, then we recommend you give consideration to a more general form or bequest. You could, for example, give your entire Estate to those of your children who survive you and, if more than one, in equal shares. In the alternative, a provision following that could state that, in the event you have no children who survive you, then your estate is divided amongst another group of your relatives or friends; and

(j)   if you were to marry or re-marry in the future, your Will would be revoked by the act of marriage and the normal rules of intestacy would apply unless the Will was made and clearly drafted to be in contemplation of marriage.

There are obviously a large range of issues that need to be considered. The above is simply designed to give you some idea as to the sorts of things that need to be addressed.

The above is not intended as legal advice. You should obtain legal advice in relation to your own specific circumstances.

Share

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

Other Articles

CONTACT US